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Laches and Acquiescence

Jun 21, 2006
Manisha Singh Nair

Indian High Court Reiterates the Settled Position

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Acquiescence, consenting by remaining silent, relates to the failure in objecting to the use of the label and to the registration of the label as a trademark while laches is the undue delay in asserting a right or bringing a suit or complaint which may be used as a defense if loss or prejudice is proved to have been caused by the plaintiff's delay. Acquiescence implies positive acts, a course of conduct inconsistent with the claim for exclusive right. The Supreme Court in Midas Hygiene Industries (P) Ltd. and Anr. v. Sudhir Bhatia ((2004) 3 SCC 90) held that in cases of infringement of a trademark or a copyright, it is well settled that normally an injunction must follow. It was observed that mere delay in bringing an action is not sufficient to defeat the grant of an injunction in such cases. The grant of an injunction also becomes necessary if it prima facie appears that the adoption of the infringed trademark was dishonest.

In Swaran Singh Trading as Appliances Emporium v. M/s Usha Industries (India) New Delhi (AIR 1986 Delhi 343), this Court held that registration of a trademark gives an exclusive right of use to the proprietor of the registered trademark with the condition that if there is a user prior to the date of registration, then that user may continue, the effect of which is that even if there is some delay in enforcing the statutory right, the exclusive right of user cannot be lost. The principles governing other types of injunctions are not to be readily applied to the infringement of a trademark. It is the duty of the Court to protect a registered trademark because in such a case the public is deceived into purchasing the defendant's goods on the belief that they are the plaintiff's goods. An injunction cannot be refused even if there is some delay in such a case because that would tantamount to permitting a fraud being practiced on unwary customers. It was further held that a delay in the matter of seeking an injunction may be a ground for refusing it in certain circumstances but a statutory right cannot be lost by delay. The defence of laches or inordinate delay is a defence in equity. If there is honest concurrent use by the defendant, then inordinate delay and laches may defeat the claim of damages or rendition of account but the relief of injunction should not be refused keeping in mind the interest of the general public (M/s Hindustan Pencils Pvt. Ltd. v. M/s India Stationery Products Co. and Ors., AIR 1990 Delhi 19). The principle that merely because the injunction application has remained pending for about years does not mean that defendants be allowed to continue to infringe the plaintiffs trademark as they cannot be permitted to take advantage of the laws delays, has been enunciated by the Delhi High Court recently in Fedders North American v. Show line (IA No.- 5662/1998 in CS(OS) No.- 1384/1998).

In the present case the plaintiff 'Fedders', a Corporation incorporated in USA, carried on an established business of manufacturing and trading wide range of air-conditioners, split air-conditioners, de-humidifiers, air-conditioning machinery, etc. under the trademark 'Fedders'. It entered into agreement with Lloyd Electric and Engineering Company (LEECO) granting them the sole and exclusive right and license to assemble, manufacture and sell its product for a period of 5 years starting 30th June, 1956 with a condition that upon termination or cancellation of the agreement LEECO should discontinue use of the trade name or label 'Fedders'. Despite that agreement LEECO applied for registration of trademark 'Fedders' which though registered in favour of LEECO was assigned by LEECO to the plaintiff on their objection for registration who then became the registered proprietor of the trademark. While the application for registration was pending, LEECO incorporated the defendant to take over the business of LEECO. The agreement was successfully executed for 5 years and both the parties again entered into royalty license agreement in 1963 granting the defendant the sole and exclusive right and license for a period of five years.

After the completion of 5 years both the parties tried to negotiate for extension but failed to reach any conclusion. The plaintiff then filed suit in Calcutta High Court, which alleged the infringement of plaintiff’s trademark and passing off for which interim injunction was passed by learned Single Judge but was stayed by the Division Bench which was later on dismissed in 1999 for non-prosecution.

The defendants had filed another suit which alleged that as the plaintiff did not use the trademark ‘Fedders’ for a period of more than 5 years, it be removed from the register, which was dismissed by the learned Single Judge and also in appeal on the ground that the plaintiff ably satisfied the court that non-use of the trademark was due to special circumstances in the trade. The case further settled following issues:

i) What was the effect of the trademark or trade name ‘Fedders’ being registered in the name of the plaintiff?
ii) Whether an ex-licencee can claim any right over a trademark of its former licensor?
iii) Whether the plaintiff was guilty of undue delay and laches?
iv) Whether the continued use of the trademark ‘Fedders’ by the Defendant was a continuing wrong?

The Supreme Court in Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories (AIR 1965 SC 980), has settled that an action for infringement is a statutory remedy conferred on the proprietor of a registered trademark for the vindication of its exclusive right to the use of that trademark in relation to its goods. It was further held that in case of infringement in the course of trade, the question whether there has been an infringement is to be decided by comparison of the two marks. Where the two marks are identical no further questions arise, for then the infringement is made out.

Registration of a trademark gives the exclusive right to use that trademark in connection with goods in respect of which it is registered, and if there is any invasion of this right by any other person using the mark, which is the same or deceptively similar to that trademark, he can protect his trademark by an action for infringement. The registration of the trademark is prima facie evidence of its validity. In the Fedders’ case after the agreement period came to an end, defendant had no right to use the trademark ‘Fedders’, which was the exclusive property of the plaintiff. The continued use of the trademark ‘Fedders’ by defendant after the agreement period was unauthorised and in violation of the rights available to the plaintiff as the registered proprietor of the trademark ‘Fedders’.

It is a settled principle of law relating to trademarks that there can be only one mark, one source and one proprietor. A trademark cannot have two origins (Power Control Appliances v. M/s Sumeet Machines Pvt. Ltd., JT 1994 (2) SC 17). In Velcro Industries v. Velcro India Ltd., (1993 (1) Arb. LR 465) the learned Single Judge of the Bombay High Court rejected the contention of the defendants that they were entitled to continue use of ‘Velcro’ as a part of their corporate name because they have had independently developed a reputation in India. The court further held that the defendants in that case were merely acting as licensees and even if the agreement between the parties did not provide that on termination of the licence, the defendants would cease to use ‘Velcro’ as a part of their trade name, that would make no difference, since the trademark ‘Velcro’ was a registered trademark of the plaintiff and to allow the defendants to use it as a part of their corporate name would be to permit them to give an impression to the public that they were still connected with or had a licence from the plaintiffs. But the Fedders’ case the agreements between the parties made it absolutely clear that after termination of the agreements, neither LEECO nor defendant would be entitled to use the trademark ‘Fedders’.

The continued use of the trademark ‘Fedders’ by the defendant was a continuing wrong and therefore the dismissal of Calcutta suit for non-prosecution was of neither of any consequence nor was a res judicata which prevented plaintiff from filing a fresh suit on other or further causes of action. Whenever and wherever a person commits breach of a registered trademark of another he commits a recurring act of breach or infringement of such trademark giving a recurring and fresh cause of action on each time of such infringement to the party aggrieved. The court further held: “No one can be allowed to ride piggyback on the name of another and if one does so by infringing the trademark of another, it is but natural that the proprietor of the trademark will suffer injury to its name and reputation”.

Thus the Delhi High Court has restrained the defendant from cashing in on the reputation of well-established Fedders North American Corporation of the US.

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